The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act
This paper examines the short and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA) which increased the national minimum wage to its highest level of the 20th Century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage due to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, the disemployment effects were significantly larger among African-American men, forty percent of whom earned below the new minimum wage in 1966.
We gratefully acknowledge the use of the services and facilities of the Population Studies Center at the University of Michigan (funded by NICHD Center Grant R24 HD041028). During work on this project, Bryan Stuart was supported by the NICHD (T32 HD0007339) as a UM Population Studies Center Traineeas well as by a generous gift from Peter Borish to the University of Michigan Department of Economics. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.